The New Gilded Age

The number of gifts of $10 million-plus at universities are at an all-time high, according to a Marts & Lundy study. Beyond lending just their names or faces to events, an increasing number of celebrities are putting in volunteer time and money for the causes they care about. And new forms of giving vehicles like LLCs are emerging to meet donors’ needs for flexibility. Articles about philanthropy are increasingly in the main stream news, describing how giving is changing our society – in fractal patterns. This week I’m delighted to welcome HBG Assistant Research Director Elizabeth Roma to the blog to help share her thoughts and expertise on our new Gilded Age.

Elizabeth Roma

When I started college in the mid-1990s, I had no idea what I wanted to study, but I knew that I liked to read and think. After taking a variety of core liberal arts classes during my freshman year, I concluded that majoring in English would allow me to spend four years doing just that, and I loved (almost) every minute of it.

I still like to read and think (and I bet you do too if you’re reading this blog), and it turns out that I managed to stumble into a job that allows me to do just that—and even get paid for it! (Side note for those soon-to-be liberal arts graduates—and their parents, siblings, grandparents, spouses, etc.: maybe prospect development is the career for you!)

The more we talked about it, the more Rachel and I realized that we couldn’t discuss the major themes we were seeing in the world of philanthropy without talking about how they were related to and impacted by current events. Since then, we have been fortunate enough to have several opportunities to present on this topic (see here for another example). Thanks to the rapidly changing world in which we live, we have never given the same presentation twice!

To put it mildly, the past year has seen some major political shifts in the world, with the UK’s Brexit vote and the election of Donald Trump as president of the United States. Although both votes were shocking in many ways, in retrospect it is clear that the circumstances that led to them had been building for some time.

Wealth and income inequality have been growing, leading to the christening of the current moment as a “New Gilded Age.” As wealth is increasingly concentrated in an elite stratum, the political influence wielded by the individual holders of that wealth continues to build. In parallel, many nonprofit organizations continue to rely more and more on the top 1% (or so) of their donor base for a larger percentage of their funding, potentially giving large donors more and more influence over the nonprofit organizations they support.

Since the presidential election in November, there has been, and I suspect will continue to be, much written about what is at stake for democracy in the current political climate. The proper role of government is something that has been debated since our country was founded, and today that argument continues to grow louder and more vociferous, with Republicans typically favoring smaller government and Democrats pushing for expansion of government programs.

Now that Republicans have control of the executive and legislative branches, it is becoming clear that government funding for many of the causes that we, as nonprofit professionals, support in our work will likely be cut (just ask anyone who works at an arts organization).

We have already seen donors stepping up in big ways as a result of the current political climate, through both political giving and philanthropy (and it is well worth noting that the distinction between the two is quite blurry in some cases).

Some examples from prior to the election:

Facebook co-founder Dustin Moscovitz and his wife Cari Tuna committed $35 million to help elect Democratic candidates in the 2016 election cycle.

George Soros announced that he would invest $500 million in programs to benefit refugees.

And after the election?

The ACLU raised $24 million in online donations the weekend after Trump’s first executive order on immigration.

Several nations and private philanthropists pledged almost $200 million for family planning at an international conference that was convened in March to find ways to make up for the gap left by the president’s ban on U.S. funding to groups linked to women’s health. Funds included $50 million from an anonymous individual in the U.S. and $20 million from The Bill & Melinda Gates Foundation.

First Look Media and the Democracy Fund, both funded by Pierre Omidyar committed $12 million to three nonprofit news organizations: the Center for Investigative Reporting, the Center for Public Integrity, and ProPublica as a response to the “fake news” epidemic.

Tom Steyer (who, not coincidentally, spent $87 million on the 2016 election cycle) said prior to the inauguration that there is “no limit” to what he will spend to oppose the Trump agenda.

If you are on the progressive side of the political spectrum, this will all sound like very good news. Philanthropists are coming to the rescue when the ideals that you hold dear are threatened by those in power.

But what if you are a conservative? Does this giving frustrate you? If the election had turned out differently, would all of the “protest gifts” be funding organizations like The Heritage Foundation, Operation Rescue, or the Foundation for Individual Rights in Education?

Which leads to another question: what should the role of philanthropy be in a democracy?

I am currently reading a new book edited by Rob Reich, Chiara Cordelli, and Lucy Bernholz (I highly recommend following them if you are on Twitter) entitled Philanthropy in Democratic Societies, and it examines this question in depth. The most fascinating takeaway for me so far has been how much all of this circles back to events of the original Gilded Age, a time that gave rise to some of the largest fortunes and most revered names in philanthropy today: Rockefeller, Carnegie, and Vanderbilt, for example.

Those fortunes led to the creation of private foundations, charitable giving vehicles that we take for granted today but which were quite controversial when they were first established, and the founders of large corporations wielded tremendous political influence, leading to public debate about how closely they and their companies should be regulated in order to protect our democracy and its less wealthy citizens. Sound familiar?

As Jonathan Levy writes in his essay “Altruism and the Origins of Philanthropy,” which opens Philanthropy in Democratic Societies, “Today, the meaning and institutional location of philanthropy, let alone its democratic legitimacy, are once again up for grabs.”

The environment in which we, our organizations, and our donors are working and living is changing at lightning speed. (For a sense of just how fast things are moving, check out the slides from the presentation Rachel and I gave at APRA in July 2016—can you believe that was less than a year ago?!).

As prospect development professionals, we have to be ready to help our organizations navigate what are shaping up to be some pretty rough waters. We need to understand and engage in this debate about what constitutes philanthropy and the role that philanthropy should play in society generally and at our organizations specifically.

We need to keep reading and being thoughtful about the context in which we are living and working.

Rachel and I will be presenting at NEDRA’s 30th anniversary conference on April 28 in Portsmouth, New Hampshire. We hope to see you there and would love to hear your thoughts on the biggest issues in philanthropy today.